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Tuesday, August 05, 2014

Medicare Pays $220 Million a Year for Acthar Without Any Controlled Trials that Prove it Works - While We Have No Money to Develop Ebola Vaccines or Treatment?

Introduction - No Money for Ebola Vaccine Development

While a new Ebola epidemic continues in Africa, people in developed countries are getting worried. Even the 0.1%, who may have rarely worried about our dysfunctional health care system before, are getting nervous. For example, this week, the Donald seemed panic stricken that Ebola infected American health workers might be allowed to return to the US, no matter what the precautions. As reported by Politico,

Donald Trump has a message for the Ebola patient coming to the United States for treatment: Stay out.

'Ebola patient will be brought to the U.S. in a few days — now I know for sure that our leaders are incompetent,' Trump tweeted Thursday night. “KEEP THEM OUT OF HERE!”

Yet, as we posted here, money was the major barrier to developing treatments of vaccines that could have helped contain the epidemic in Africa, but whose availability in the US could also have reassured the Donald. Dr John Ashton, a top public health physician in the UK, wrote in the Independent,

We must also tackle the scandal of the unwillingness of the
pharmaceutical industry to invest in research to produce treatments and
vaccines, something they refuse to do because the numbers involved are,
in their terms, so small and don't justify the investment. This is the
moral bankruptcy of capitalism acting in the absence of an ethical and
social framework.

It seems that in the US and UK, our market based health care system can only cannot develop treatments for dangerous diseases when the treatments will produce huge returns on investment. The irony is that even people (like Mr Trump) who preached market triumphalism and limiting government, presumably from doing things like developing drugs, may now fear diseases for which the market alone provides no remedy.

Meanwhile, while there was no money to develop vaccines and drugs for Ebola, a story about how much money we are spending on questionable remedies has reappeared.

But a Huge Increase in Money for Acthar

This week, writing in ProPublica and the New York Times, Charles Ornstein noted the huge amounts being paid by the US government for a previously obscure drug,

An obscure injectable medication made from pigs' pituitary glands has
surged up the list of drugs that cost Medicare the most money, taking a
growing bite out of the program's resources.

Medicare's tab for the medication, H.P. Acthar Gel, jumped
twentyfold from 2008 to 2012, reaching $141.5 million, according to
Medicare prescribing data requested by ProPublica. The bill for 2013 is
likely to be even higher, exceeding $220 million.

Over approximately the same time course, commercial US health care insurers and the Tricare program for military dependents noted a surge in the amounts they were paying for this drug too,

At a recent conference hosted by Sanford C. Bernstein, Dr. Ed Pazella,
Aetna's national medical director for pharmacy policy and strategy,
explained the shift on Acthar.

Questcor's 'combination of aggressive marketing and aggressive price
increases finally caused it to become a line item that a finance guy
looked at and said: 'What the hell are we paying for this? Why? What is
it?' And that's when we started looking at what's our policy around this
stuff,' Pazella said.

You Heard it Here First - a Huge Price Increase for an Old Unproven Drug

This problem's development took quite some time. As we first discussed in 2007, some clever maneuvering by corporate executives around loopholes in government rules benefited the executives, but maybe no one else.

The clinical background is that Acthar is a form of a hormone (ACTH) that stimulates the adrenal gland to produce more cortisol and other related hormones. The formulation is made from pig pituitaries, and was developed in the 1940s. It was approved by the US Food and Drug Administration at a time when this action did nor require proof of efficacy, that is, proof that the drug worked. For years, the drug was only used for a rare form of infantile seizures, and occasionally for symptoms of multiple sclerosis in adults. As noted in several reviews by the Cochrane Collaboration, there is little good evidence that the drug works for either condition, and no evidence that it is better than simpler, cheaper alternatives, like synthetic alternatives to cortisol, for the latter. (See this blog post).

The drug languished for years, but Questcor purchased the rights to it in 2001, apparently for a mere $100,000 (look here). In 2007, the company jacked its price up in 2007 from $1650 a vial to $23,000 a vial.

A Further Price Increase, and a Big Marketing Push

As Mr Ornstein noted, its price is now $32,000 a vial. One might expect that this huge price would quickly generate competition from generic drug manufacturers, but, per Mr Ornstein,

Although it long ago lost patent protection, the drug is a complex
biologic agent, and the manufacturing process is a trade secret.

Furthermore, infantile spasms may be rare, but,

Since Acthar came on the market in 1952, the rules about F.D.A. approval
have changed. At the time, drug companies simply had to demonstrate
that a drug was safe, rather than that it was effective. Acthar was
initially authorized as a treatment for more than 50 diseases and
conditions. (The list has since been cut to 19.)

Drug companies are barred by federal rules from marketing drugs for "off-label" indications, however, given the above, it was not obviously illegal when Questcor

began marketing it for a broad menu of uses.

In addition, Medicare could not easily challenge the huge price Questcor was charging for this unproven remedy given to adults

Medicare cannot bar access to medications like Acthar, even in the face
of rising expense and questions about efficacy, Aaron Albright, a
spokesman for the Centers for Medicare and Medicaid Services, said in a
written statement. The law mandates that Medicare's drug program, known
as Part D, cover drugs for the uses authorized by the Food and Drug
Administration, he said.

Questions about Questcor's Marketing

In fact, while it appears legal to promote Acthar for uses for which it has no proven efficacy, there are some questions about Questcor's marketing practices,

Many of Medicare's top prescribers of the expensive specialty drug H.P. Acthar Gel have financial ties to the drug's maker.

Only 18 practitioners wrote 15 or more prescriptions for the drug in
2012. At least nine — and all of the top four — were promotional
speakers, researchers or consultants for Questcor Pharmaceuticals, a
ProPublica analysis shows.

For years, Questcor Pharmaceuticals has highlighted the potential
benefits of Acthar, its immune-system drug, while saying little about
its ill effects.

But as had been noted also by Gretchen Morgenson in the NY Times in June, 2014, more information about adverse events began coming out, not mainly for the benefit of patients, but apparently due to questions by investors about a pending takeover of Questcor by Mallinckrodt,

Since 2012, the events, as reported
to the Food and Drug Administration’s Adverse Event Reporting System,
or Faers (pronounced 'fares'), have included 20 deaths and six
disabilities among patients reported to have been using Acthar and in
which Acthar was recorded as 'suspect,' or the drug most likely to have
been associated with the event. From January 2000 through 2011, by
contrast, 13 deaths involving Acthar were reported to the F.D.A.’s
system.

Although Questcor has reported some of these events to the F.D.A., as
required, the company has not discussed the adverse outcomes in its
financial filings. A Supreme Court ruling in 2011 concluded that reports
of adverse events among patients using a drug, even if few in number,
are of interest to investors weighing whether to buy or sell shares in
the manufacturer.

according to a regulatory filing made by Questcor early Thursday, the
number of patients reporting a so-called adverse event while using the
drug last year represented almost 5 percent of prescriptions dispensed.
The total number of events in 2013 reported by patients, who can
experience multiple ill effects, was almost 14 percent of prescriptions,
up from 9.1 percent in 2011.

It
was the first time Questcor, which has received a $5.6 billion takeover
bid from Mallinckrodt Pharmaceuticals, had disclosed any problems
experienced by Acthar patients, even though such information is of keen
interest to investors.

That information might also be of interest to patients and doctors.

Questions about Questcor's Executive Compensation

While Questcor brought in huge amounts of money from an old unproven drug using aggressive marketing that did not dwell on the drug's adverse effects, its executives have been making lots of money, sometimes in questionable ways. For example, in February, 2014, Jesse Eisinger also reported for ProPublica that the timing of Questcor CEO Don M Bailey's stock sales has seemed unusually fortuitous,

Questcor Pharmaceuticals is a biotechnology company with a $4
billion market capitalization. Good things keep happening to Questcor in the
middle of the month. Here’s what’s notable: The middle of the month just
happens to be the time that the company’s chief executive, Don M. Bailey, sells
stock through his regular selling plan.

The question is whether the company timed its favorable press releases to coincide with the times its CEO was known to be selling his shares?

Also, in May, a blog on The Street noted that the CEO's daughter also appears to have been quite fortunate, for no obvious reason,

Kirsten Fereday, the daughter of Don M. Bailey,
our Chief Executive Officer, was employed by us during 2013 as our
Senior Director, Business Analytics and Evaluation, and received
total cash and equity compensation for the year ended December 31, 2013
equal to approximately $1,035,246 in cash compensation and $200,000 in
restricted stock grants (value based on intrinsic value
method). Ms. Fereday's employment was approved in accordance with the
Related Party Transaction Policy and our Chief Executive Officer is not
involved in the determination of Ms. Fereday's compensation. [Emphasis
added.]

Why did her pay go up so much compared to that received in the previous year?

Furthermore, while Questcor derives a tremendous amount of revenue from the US government, a deal is in the works for it to be acquired by Mallinckrodt, now based in Ireland, which, if successful, will make top Questcor executives even richer, as Gretchen Morgenson wrote in the NY Times in June, 2014,

If the acquisition by Mallinckrodt goes through, Questcor’s top six
executives could receive severance packages totaling $63.5 million under
the terms of their contracts, the merger proxy shows.

Also,

During the time that adverse events involving Acthar have risen,
Questcor’s top executives have been actively selling shares. So far this
year, securities filings show, sales by the top five executives at the
company, four of them under prearranged selling plans set up last year,
have generated gains of $39 million.

Summary

As Andrew Pollack wrote in the first NY Times coverage of how Questcor used an old unproven drug to generate huge returns,

How the price of this drug rose so far, so fast is a story for these
troubled times in American health care — a tale of aggressive marketing,
questionable medicine and, not least, out-of-control costs.

The sorry case of Questcor and Acthar reveal how crazy the costs of health care in the US have become, driven now by a system that itself now seems crazy. Through clever use of regulatory loopholes, the company acquired rights to an old drug whose efficacy was unproven, hugely increased its price, began aggressive marketing even though the drug's efficacy was completely unproven, while remaining largely silent about the drug's substantial risks. Fueled by hundreds of millions of dollars in revenue thus generated, mainly from the US government, the company richly rewarded its top hired executives, who then have decided to sell it to a company outside of the US in a deal that will make these executives millions more. So patients received a drug whose benefits are unknown, and whose risks may be much higher than they were told, at a cost of hundreds of millions of dollars, much of it borne by US taxpayers, while company executives got rich.

Just coupling for now the story of how we spent hundreds of millions on Acthar to enrich company executives with the story that we have no money to develop vaccines or treatments for Ebola virus (look here) demonstrates the massive failure of our experiment to turn our health care system over to market triumphalists and laissez faire mercantilists. As long as we let the health care system be run by people who put their own enrichment ahead of patients' and the public's health, things will only get crazier. And even the rich may not be immune from the results of that craziness

But this sort of reform would challenge the interests of managers who are getting very rich off the current system. So I am
afraid the US may end up going far down this final common pathway before
enough people manifest enough strength to make real changes.

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